Crypto-friendly UK banks develop cold feet amid crypto collapse

The United Kingdom is one nation that has taken an aggressive stance against the crypto world. The recent collapse of one of the popular crypto exchanges, FTX, resulting in the overall market cap falling below US$800 million for the first time since 2020, seems to have forced financial institutions around the globe to rethink their crypto policies.

The UK banks such as RBS, Barclays etc., allowed crypto payments through credit cards. However, Lloyds, Barclays RBS etc., have blocked crypto payments done through credit cards and transactions with exchanges.

But now, the latest one to pull the plug is the Starling Bank, which, on 22 November, banned crypto transactions for its customers. Starling Bank took the extreme step as crypto industry remains a high-risk space.

Cryptos used for criminal activity?

According to a report from leading analysis firm Chainalysis, as on July 2022, crypto-related crimes sit at US$1.9 billion. These involve hacks and scams, which can be attributed to the meteoric rise in embezzled funds from Decentralized Finance (DeFi) protocols and other cross-chain protocols.

Notably, Starling joined the crypto restrictions bandwagon along with Santander, which had set limits on Bitcoin and Ethereum transactions.

Amid this news, let's look at how the other crypto-friendly banks are faring.

Lloyds Banking Group Plc (LON: LLOY)

One of Britain's major financial service providers boasts a market cap of £ 30,597.62 million. The FTSE 100 constituent, on 24 November, was GBX 46.03, up by 1.2% at 11:41 am GMT. Over the past year, the stock price declined by 7.51%. Even on a YTD basis, the stock price depreciated by 3.63%.

Barclays Plc (LON: BARC)

Another leading financial giant, Barclays Plc, is listed on the FTSE 100 index. On Thursday,the bank held a market capitalisation of £25,095.47 million.

In the past 12 months, the share value has plunged by around 17.43%, and fell 14.41% YTD. Barclays' shares were trading at GBX 159.94 and were up by 1.1% on 19 May 2022.

Bottom line

Having said that, while the banks have taken a grim view, the crypto investors must realise that crypto markets are often volatile and risky in nature. Therefore, one must do market research before entering the market. 

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